Below is a summary of the major tax incentives that Congress has put in place to encourage certain behaviours by US corporations.

Domestic Production Activities Deduction (DPAD)

In an effort to encourage companies to keep their manufacturing processes in the United States, Congress came up with the Domestic Production Activities Deduction (DPAD). The DPAD allows US corporations to reduce their taxable income by 9% of their income from domestic production. This provision was created in response to many businesses outsourcing production to cheaper overseas facilities.

Foreign Tax Incentives

Multinational companies are not required to pay US taxes on profits earned overseas until they bring the earnings back to the US. This has created an incentive for US companies to keep cash overseas to pay taxes at a preferential rate. With the passage of the new US tax law in December 2017, the corporate tax rate was reduced to 21%, which should theoretically reduce some of that incentive to keep profits away from US taxation. But, the law also allows businesses to keep a portion of overseas profits tax free, which could continue incentivizing manufacturing in other countries.

State and Local Bonds

In order to encourage investment in state governments and local communities, Congress exempted state and municipal bonds from federal taxation. This incentivizes corporations (and individuals) to purchase these types of bonds. The logic in this type of policy is that these funds are frequently invested in programs that benefit local communities, unlike federal or corporate bonds.

Environmental Tax Credits

As part of the United States’ move towards environmental stability, the EPA has introduced a system of tax credits that incentivize US companies to reduce their emissions. The main type of these incentives is called Emission Reduction Credits or ERCs. Polluters are given a specified rate of pollution and earn a tax credit by reducing their rate of emissions below the threshold. Many of these credits are grouped into a ‘General Business Credit’ for tax purposes, including the biodiesel fuels credit, alternative motor vehicle credit, and the renewable electricity production credit.

Research Credits

In order to incentivize research and development, the research credit is available for companies that make qualified research expenditures (QRE). A QRE must involve developing products, manufacturing processes, or software in the US. The amount of the credit is usually 20% of all QREs above a certain base amount. This credit has been a boon for US corporations every since its inception in 1981.

Credit for Low-Income Housing

Congress wanted to incentivize real estate developers to set aside a portion of the homes they build for low-income people. So, they offered a sizeable tax credit for developers who engage in this type of practice each year. The result has been companies setting aside 20%-40% of the certain developments for those whose income is well below the median gross income for the area.

As an American living abroad it is essential that you stay in like with your US tax obligations in order to avoid unnecessary penalties and stress. This article offers a guide on what documents American Expats need in order to file their US expat tax returns. These documents are not only necessary to finalize your US expat tax return, but also to protect yourself in the event of an Audit from the IRS.

As a American living in the UK it is normal and expected to become homesick from time-to-time. While the Americans and English have many similarities in terms of lifestyle and interests, there are always going to be some differences that are likely to make any American feel slightly homesick.

Britain may well have one of the best tea selections in the work, however many Americans wake up craving nothing but an an omelet and a hot cup of filtered coffee.

Below we have put together a guide on London’s top spots for any homesick American living in the London:

Under the Tax Relief and Job Creation Act of 2010, the energy efficient appliance credit was modified and extended. This means that tax credit can be claimed for each type of qualified energy efficient appliance produced by the taxpayer during the 2011 calendar year ending with or within the taxpayer’s taxable year.

As an SME in the Creative Industry in the United States, they are eligible to certain tax reliefs. Like all SME’s in the US, an enterprise is eligible to a tax deduction for qualifying charitable donations.

As a US accountant to creative industry professionals, we understand that travel and varying bases is a huge factor of many creative industry jobs. Whether you’re an actor who has had to move to the other end of the country for a production contract, or a musician that is touring the US, we are expert in your tax matters.

On May 25th 2018, the IRS announced several changes in the Tax Cuts and Jobs act that affect moving, mileage and travel expenses.

Just like US Citizens and Green Card holders, US businesses must report and pay tax on their worldwide income. The individual filing requirements of each entity can be dependent on a number of factors. This article aims to break down the basics of the filing requirements for common types of foreign entities.